Southwest Airlines’ Business Policy Summary

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Introduction

Currently, the company is operating approximately five hundred and thirty-seven Boeing. It also has around seven hundred and thirty-seven passenger aircraft. This enables the southwest company to provide adequate and efficient service to almost sixty-four cities. This is in almost thirty-two states throughout the United States of America. Generally, the company concentrates more on the one-to-one way of proving its services to the customers. This is with disregard to hub and spoke method of dealing with the customers (Peterson 2004). The company also has around four hundred and thirty-eight non-stop flights between the cities. This means that a figure which is approximately 78 percent of its customers fly without stoppages on their journey although in most cases it depends on the customers choice.

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Generally, the company serves and dominates the short routes in the United States. The short routes mean high frequencies translating to more trips per day. Sometimes the company substitutes this short trips with somehow medium and also long routes. This includes services even beyond the American continent. On average the companies’ trip or stage length is around six hundred and thirty-six miles. This translates to a mean duration of about two hours (Rob 1997-02-21).

Ownership of the company

The company is owned by shareholders. The owners own about 5 percent of the shares while on the other hand insider owns 4 percent. About 8.2 percent of the shares are owned by institutional and mutual owners with a float of 8.2 percent. The total number of intuitions owning actual shares is around three hundred and eighty-three (Drew and Scott 2008).

Marketing strategy

At the beginning of 2008, Southwest Airlines announced that it had improved its marketing strategy and started financial derivative tools. This implies that southwest Airlines can take advantage of marketing strategy to create their market niche. This will see them dominating the market (World Airline Directory 1975). Also, the company had hopes of taking the opportunity of historically low jet fuel cost and venture into creating a large customer base. The company’s decision came out to be a profitable idea and for some time a successfully profitable effort was realized. The company had been more interested in lowering the tolerability of prices of oil. At the moment, they hoped to earn huge profits from the rise in oil prices.

In 2009, the company for the second time consequently raised its priories. This time round in response to the expected rise in the price of crude. The use of these strategies assisted the company to sustain its profits during the oil hiccups.

SWOT Analysis

This involves the analysis or evaluation of all the internally oriented and externally oriented environmental factors of any business unit which is a significant portion of the strategic implementation procedure. Factors that are internal to the business are said to be either strength (S) or weaknesses (W) and which emanate outside the business are referred to as opportunities (O) or threats (T) forming the word SWOT. Analysis of the strategic environment of any business is known as SWOT analysis or matrix. Generally, SWOT analysis or matrix gives a guideline that is useful in reconciling business resources and abilities to the marketing environment and culture of where it is located. SWOT analysis is important in marketing planning and allocation (Jan Y. 2002). The following is a SWOT analysis of Southwest Airlines.

Strengths

The strengths of Southwest Airlines company are strong services established by great and newly branded passenger services with a clear focus on the quality of the service delivered, reliable and competitively priced travel services. In addition to the efficiency of delivering the services; there are strong brands, which have been tried before entire application in the market. With consideration of a fund brand nature and good market, aspects are favorable to flight service industry giving newly implemented strategic sparks in an all-round competing market situation in the United States of America. On the other hand, a little developing risk is witnessed since the airline service company is already established. Favorable and little risk development across a short period to the market and short period of duration for the flight service industry. Also, there is a low cost of a unit because of the low prices of fuel. Transferable business modulations due to the same trends and the tradition of the flight industry. Also the capability to concentrate on brand and ideology with expansion through tourism and other market openings. There is also little risk of management as a result of experienced staff and the high diversification of skills and experience giving wonderful results. There are also high gross profit margins on their services, which can be optimized by negotiating bulk service delivery to travel agencies in their destination countries.

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Weaknesses

Southwest Airline Company has the following weaknesses; its dependability of ideology as the services and products does not have the possibility of patenting; this requires to be tackled by establishing strong brand awareness and establishing the possibility of copyright on the entire quality system. On the other hand, focusing also on quick growth and establishing prime shares in the targeted markets; marketing logistics is being considered through designing and advertising, which considers also the breakeven results for the trade without extra cost. Central customer facilities are also being established to support marketing strategy; permits for service delivery in the virgin areas need to be established before implementing in those areas; product may be vulnerable to weakening over time due to competition in the industry which can be minimized through service product innovation and diversification.

Opportunities

The opportunities of southwest airline companies are, niche-specific opportunities through monopolizing niche market by building strong brand/service awareness and leading in the service industry through being vigilant with other established business opportunities; low restriction to operating hours means there can be diversity of destinations and access to a very diverse target customer destination; capitalize on the diversity of services and consumer groups to promote and expand the market through seasonal tourism and established travel agencies; international expansion to other parts of the country, which has a strong culture for flight services.

Threats

In southwest airline company the threatening situations might comprise of:

  • government regulations concerning flight service industries which may mean permits secured have minimum life period in different countries
  • change in such service industry is slow
  • vulnerability to the imitation of products due to the competition will be reduced through the rapid development of service products and brand
  • short route permits mean the brand needs to be diversified through promotions and well-planned advertising
  • Seasonal demand in-flight service industry means inconsistent returns which can be minimized through diversifying brand to through delivery of quality services.

Five-year strategy for growth

The success of a company depends more on its marketing strategy. The more Successful a company is the more specific and completely different challenges it will face. On the other hand, several service brands fit in the strategic marketing process and that are significant to all business organizations having the will and ability to develop market-focused ideas. Major and strategic ideas might comprise leveling the design structure of the business. This involves also realizing the expansion plan and growing market strategies, which may result in the achievement of a capable and value-oriented complement. On the other hand exploration of strategically focused business relations and at the same time growing stable and unique brands. This involves brand leveling and realization of the significance of down to business strategies. Apart from the strengths, weaknesses, opportunities, and threats of a business unit, there are also other factors to be taken into account. This is because other external factors may affect strategic market planning in southwest flight companies. Such factors include (1) Politics and Legislation, political instability in the specific countries in which the company is planning to expand its services can affect the marking planning un-predictable. On the other hand government regulations concerning issues like taxation, environmental controls, subsidies and quotas regulations, consumer legislation and regulations can drastically affect the marketing planning; (2) Economy and Business Environment which comprise of, industrial or business growth capability, the different investment potentials, strategies and positions, costs of providing the services and supply chains, diversification or capacity building changes on the supply base, source energy availability(including the fuels) and the cost of consumption, transportation logistics factors and also consumer spending,(3) Society, Demographics shifts and changes, wealth distribution, social mobility or distribution, institutions, education, schooling, lifestyle trends, how time is utilized, the attitudes of work, how people spend their leisure time, relationship of the business unit and the public(public reputation of the business on the eyes of the public), family, fashion, focus and interest development and (4) the art or technological know-how, the rate at which innovation is taking place, the duration that a single development takes during product development cycle, the investment on technology, the speed at which the new technology is incorporated in the business unit and in the product life cycles, reduction in cost due to deflation, the rate of return on investments, technological incentives, government investment, cross technological networking and developments. This and many other factors all may affect strategic growth plans.

The first strategy for growth is diversification of Products and services; southwest Airlines company should diversify their products and services to pull a large number of customers from different cultures and other walks of life. This should be done with quality in mind to venture into the market without much struggle. This diversification should also include other forms of generating revenue especially from gaming and entertainment activities for its customers. By being involved in more than one industry, will give southwest airline company benefit of drawing from one part of its business if another part becomes less promising especially during low seasons. Gaming and entertainment (as well as hotels) serve different customers’ needs (Johnson and Scholes 1993). While this diversity does not automatically ensure success, it does help the flight service industries to balance out their profits across various areas of the business. The second strategy for growth involves connecting with external public social networking services, such as Facebook, MySpace, Linkedin, and Friendster. This can be valuable in promoting sales, marketing, and support tools. The services consist of large connections of people who have organized themselves in groups and social networks. The people develop connections to connect with others in the same network to form a large social community. These people also connect in these networks and cultural communities to enjoy things like common products and cultural practices. People establish direct and feasible connections to other people. The social network enables people to connect with other network users of which there is no direct connection. People develop their own rules and regulations to engage themselves in specific types of connections in their social community networks (Byars 1991).

Five years strategic plan

The five-year strategy should be grounded on getting into the market immediately and it would be attained through having company outlets in almost all the best positions where there is a high probability of consumption of its products is ideally higher. The social network is engaged to a guaranteed quality market planning system ensuring good quality management (Holt 2007). This can be considered in the strategic planning and as a result, the anticipated profit for southwest Airlines company will be 35%.

A powerful strategic communication for marketing makes a business stand out from its competitors. Marketing communication is fundamental in determining the buying decision of the targeted consumers Integrated Marketing Communication (IMC) is the good and sufficient use of the promotional tools employed to ensure a universal, clear, and precise marketing message is adequately communicated to the desired audience (Cooper 2000).

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Many a time’s marketers draw comparisons to the competitors of their products or services in marketing and advertisements (Leuser and Washburn 2007). Thus being a common method used to bring a difference between a company’s brand and an existing brand in the market place demonstrating your product’s unique characteristics through comparison is often a very effective method, but it must be used with care.

Evaluation Methodology

If well managed the plan can bear fruit even before the five years. The main evaluation method will be by use of primary methods. This will be conducted using questionnaires which will be issued to customers both physically in all the companies outlets. This will also be done through the internet whereby electronic forms will be readily available on the company’s website and another major and frequently visited website. Also the physical will be available in all travel agencies within and outside the continent.

Sustainability management will also be included during implementation. The achievements made in this way will be communicated clearly and factually to both employees and the general public (Kotler 1998). However, there are several challenges that the airline company will be facing to realize its dreams. These include among others how to involve all employees in implementing the sustainability strategy, to identify topics and forms of dialogue to strengthen cooperation with different stakeholder groups and how to understand and promote social and ecological aspects as resource-friendly and efficient alternatives on supplier markets (Pearce and Robinson 2005). To advance its international marketing strategy, the southwest company is currently making a formal entry into the market. The wide range of activities planned and organized for the other destination countries include the establishment of more sales subsidiaries in those countries, especially in Africa.

References

Byars L. (1991), Strategic Management, Formulation, and Implementation – Concepts and Cases, New York: HarperCollins.

Cooper L. (2000), strategic marketing plan radically new products, Journal of Marketing, Vol. 64 Issue 1, pp.1-15.

Drew G. and Scott B. (2008), Records: Southwest Airlines flew ‘unsafe’ planes. Web.

Holt R. (2007) Volume 2: Accounting, finance, and economics.

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Holt, R. N., & Muller, C. (2007) Volume 3: Business math and statistics

Jan Y. (2002), A three-step matrix method for strategic marketing management, Intelligence and Planning, Vol. 20 Issue 5, pp.269-272.

Kotter J. and Schlesinger, L. (1992), developing options for change, Business Review, pp.24-29.

Kotler P. (1998), Marketing Management – Analysis, Planning, Implementation, and Control, 9th Edition, Englewood Cliffs: Prentice-Hall.

Leuser D. and Washburn J. (2007) Volume 1: Management, ethics, information systems, and marketing.

Lunsford J. (2008), Airlines Dip into Hot Water to Save Jet Fuel. Wall Street Journal.

Pearce J. and Robinson R. (2005), Strategic Management, 9th Edition, New York: McGraw-Hill

Peterson B. (2004). Blue Streak: Inside jet Blue, the Upstart that Rocked an Industry. Portfolio Hardcover. ISBN 1-59184-058-9

Porter M. (1985), Competitive Advantage, New York: Free Press

Rob K. (1997), Southwest may add cities to Iceland deal. Baltimore Business Journal. Web.

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